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Cablegate: South Africa Government and Regulator Weigh in On

VZCZCXYZ0007
RR RUEHWEB

DE RUEHSA #1393 1130912
ZNR UUUUU ZZH
R 230912Z APR 07
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 9283
INFO RUEHNR/AMEMBASSY NAIROBI 6375
RUCPDC/DEPT OF COMMERCE WASHDC
RHDIFCC/FCC WASHDC

UNCLAS PRETORIA 001393

SIPDIS

SENSITIVE BUT UNCLASSIFIED
SIPDIS

FCC WASHDC FOR PBOATENG, DEPT FOR EB/CIB TCARNEGIE

E.O. 12958: N/A
TAGS: ECON ECPS SF
SUBJECT: SOUTH AFRICA GOVERNMENT AND REGULATOR WEIGH IN ON
UNDERSEA TELECOM CABLE

REF: 06 PRETORIA 02711

1. (SBU) Summary. The South African Department of
Communications (DOC) and the New Partnership for South
Africa's Development (NEPAD) may build an undersea
telecommunications cable to replicate the planned East Africa
Submarine System (EASSy) cable. A decision by the CEO of
monopoly telecom operator Telkom to invest in the EASSy
cable, in opposition to the government's position, is
believed to have led to his resignation. South Africa
telecom regulator, Independent Communications Authority of
South Africa (ICASA), is considering declaring the planned
undersea cables and the existing SAT-3 cable as essential
facilities and therefore subject to ICASA price regulation.
End Summary.

2. (SBU) South Africa DOC Director-General Lyndall
Shope-Mafole confirmed April 3 that DOC, together with NEPAD,
may lead an effort to build an undersea telecommunications
cable to rival the planned R300 million ($43 million) EASSy
cable according to press reports. (Note. The EASSy
consortium is comprised of private investors who want to
build an undersea telecommunications cable with terrestrial
landing points in countries along Africa's east coast to help
meet high bandwidth demand. End Note.) Shope-Mafole claims
that EASSy consortium investors are more interested in
profits than providing affordable bandwidth and is looking
for investors in the competing cable which has been dubbed
the NEPAD Network. The competing system would combine an
undersea cable with a terrestrial network to cover landlocked
countries.

3. (SBU) NEPAD's e-Africa Commission Executive Deputy
Chairperson Henry Chasia told ICT officer in December 2006
that it was conducting feasibility studies to build two
terrestrial loops to connect with an undersea east-coast
cable that would feature connection points for countries not
currently participating in the NEPAD initiative, most notably
Kenya. South Africa and NEPAD want pricing for the undersea
cable to be set so that users will pay the same price for
bandwidth access as the companies that invested in the
infrastructure.

4. (SBU) NEPAD's pricing scheme would prevent cable investors
from charging exorbitant rates for bandwidth access like
those charged by SA parastatal telecom monopoly Telkom for
use of its west coast SAT-3 cable. Telkom CEO Papi Molotsane
signed an agreement to invest in the EASSy cable, saying his
company wants to make a decent return. President Mbeki, in
an interview with the Financial Times, said that Telkom was
"profiteering" from charges on the SAT-3 cable that are
"absolutely phenomenal". Industry analysts claim that
Molotsane's signature on the EASSy cable deal and his
opposition to the government's position on pricing led to his
unexpected resignation on April 5.

5. (SBU) ICASA Councilor Tracy Cohen told ICT officer April
19 that the regulator is considering declaring both the SAT-3
and future undersea cables as essential facilities. This
would place pricing of the cables under ICASA regulation.
Cohen said the council expects to release a document for
public comment on the topic of cable regulation within the
next four months.

6. (SBU) Comment. ICASA's ability to deal with undersea
cable regulation and other matters has improved slightly
because its council is now fully staffed. The regulator had
struggled since last year to implement a new Electronic
Communications Act with half of its council positions vacant.
(See reftel for additional background). End Comment.
BOST

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